Ford Motor Co.
(
F
) plans to boost output by 40,000 vehicles by shortening the summer
shutdown at its 13 North American plants to one week from the
traditional two weeks. The move is based on the company's aim to
match output with improving demand for its vehicles and is
consistent with its target to enhance annual production capacity by
400,000 vehicles.
Recently, the automaker revealed its fear to lose market share
due to insufficient capacity to meet consumer demand. Most of the
company's plants are already operating at maximum capacity. As a
result, adding a week of production to the plants turned out an
easy way out from the capacity bottleneck issue.
The 13 plants include 6 assembly including Chicago Assembly,
Dearborn Truck, Kentucky Truck, Louisville Assembly, Michigan
Assembly and Kansas City Assembly. The remaining 7 plants include
Dearborn Engine, Chicago Stamping, Cleveland Engine No. 1, Lima
Engine, Essex Engine, Sterling and Rawsonville.
These plants are normally closed for two weeks around the U.S.
Independence Day holiday on July 4 in order to switch production to
the next model year. At that time, automakers gear up the
facilities for the next vehicle models by making changes in
engineering and design systems.
Ford is not exception to the capacity issue. Recently, Chrysler
Group LLC - controlled by Italy's
Fiat SpA (
FIATY
) - revealed its plan to give up normal two-week shutdown in summer
for 2012 due to the same problem. However, no one has heard from
General Motors Company
(
GM
) regarding its production schedule.
Last month, U.S. saw a sluggish 2.3% growth in light vehicle
sales to 1.18 million units from 1.16 million units in the same
month last year. Meanwhile, it rose 9.5% to seasonally adjusted
annual rate (SAAR) of 14.42 million units from 13.17 million units
in April 2011.
The sluggish growth can be attributable to lower sales recorded
by GM and Ford and fewer selling days (due to more Sundays than
April last year). But thanks to the fuel-efficient lineups and pent
up demand that kept the auto sales recovery on track.
Ford's sales slid 5% to 180,350 vehicles due to shortages in
production. The company's top selling vehicle during the month was
F-Series pickup trucks, which saw a 4% rise in sales to 47,453
units. Meanwhile, sales of the recently revamped models - Lincoln
MKS sedan and MKT crossover - surged more than 50% during the
month.
Ford, a Zacks #3 Rank (Hold) stock, posted a sharp 20% fall in
profits to $1.6 billion in the first quarter of the year from $2.0
billion in the same quarter of 2011. On per share basis, profits
ebbed 17% to 39 cents from 47 cents in the first quarter of 2011.
Nevertheless, it was higher than the Zacks Consensus Estimate of 35
cents.
The automaker has attributed the decrease in profits to higher
tax expense, lower operating results and higher charges emanating
from buyouts of hourly workers in the U.S. as part of its UAW
agreement in 2011.
The company's profits drastically fell in all its operating
regions, except North America. In fact, it recorded a loss in
Europe and Asia Pacific Africa compared with a profit in the
comparable quarter of 2011.
Total revenue in the quarter slipped 2% to $32.4 billion, barely
surpassing the Zacks Consensus Estimate of $32.0 billion. The fall
in revenues was attributable to lower wholesale volumes in Europe
and Asia, partially offset by higher volumes in North America and
South America.
FORD MOTOR CO (F): Free Stock Analysis Report
FIAT SPA (FIATY): Free Stock Analysis Report
GENERAL MOTORS (GM): Free Stock Analysis Report
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